Let's play catch-up: what is catch-up bookkeeping?

Has it been a while since you cracked open your accounting software? Oops. When your business grows exponentially, or your bookkeeper hits the road, it doesn’t take long for your books to fall behind. And that can lead to catastrophic results. Catch-up bookkeeping helps you right the ship and make sure you can still keep the lights on. In short, it’s the process of getting your books current and catching any mistakes that you may have missed.

Not only can catch-up bookkeeping give you a clearer picture of your revenue and overall financial health, but it gets your accounts receivable and accounts payable back on track. In addition, managed books make it easier to grow and help you stay compliant when tax time rolls around. Learn more about catch-up bookkeeping and when you might need it. It might be more often than you think.

What is catch-up bookkeeping?

Catch-up bookkeeping is the process of getting your financial records up to date. This necessary part of bookkeeping includes everything from analysing bank statements to reconciling your accounts receivable.

You don’t just require catch-up bookkeeping after a sustained period of neglected books. Rather, anytime you need to reconcile your accounts or migrate your data, you can use a catch-up bookkeeping service to confirm that you’re working with current information. If you have even a short period between a new bookkeeper, you’ll also want to do some catch-up bookkeeping to start your new staff member off on the right foot.

When does your business need catch-up bookkeeping?

There are lots of times when you might need to catch up on your books. Some are for your own convenience, while others relate to serious government penalties. Under Australian tax law, you must keep records that explain all your business transactions, including those related to tax and superannuation, generally for 5 years. Employers must also keep time and wages records for 7 years under the Fair Work Act. Your business should be able to substantiate anything reported on its tax return or activity statements, and the ATO can apply penalties or direct you to a record-keeping course if your records fall short.

Tax ready strategy aside, here are some of the most common times we recommend catch-up bookkeeping:

• When you need to add accounts. Are your records incomplete? If you’ve been using a new business credit card for a while and haven’t added it into your accounting software then you may be missing months of transactions. You can’t have accurate financial reporting if you don’t actually know what’s coming in and what’s going out.
• When you have unreconciled transactions. Whether it’s for a month or just a few days, your general ledger should contain all receipts, payments, and invoices listed by transaction. Missing transaction data could throw off your entire financial picture. Bringing the data up to date means your ledger is back in business.
• When you’re migrating to a new software system. Moving over to Xero or similar accounting software? You want your data labelled properly, and that means a little catch-up bookkeeping to make sure you’re entering the most recent and accurate figures. It’s much easier to get everything up to date in your existing software than to fix it in your new software six months later.
• When you need to prepare reports. If you’re seeking additional funding or want to show stakeholders the financial state of your company, playing catch-up on missing data is crucial. You can’t generate an accurate report without up-to-date figures. You could miss out on an investor if you’re using incomplete reports.
• When you aren’t being paid correctly. When your business is not being paid correctly, you may not be able to operate. If you suspect customers owe you money, catch up quickly: your reporting and tax obligations could be wrong, and unpaid invoices are money you could put towards extra staff or growing your business.

After my books are caught up, what is next?

What a catch-up involves

A catch-up starts with a scope: which accounts, how many months, and what is missing. The work can only be as good as the source data, so expect to provide bank and credit card statements for the whole period, sales invoices, supplier bills and receipts, payroll reports, loan statements, and access to your accounting software and bank feeds. Gaps in that data take longer to resolve, and some may need your own input or a decision from your tax agent. The time a catch-up takes depends on the size of the backlog and how quickly records arrive, so treat any estimate as just that. Once the books are current, you review the reconciled accounts before anything is lodged, and any overdue BAS or returns are lodged by you, a registered BAS agent or your tax agent.

Catch-up work is a one-off project. Keeping the books current after that is ongoing monthly bookkeeping, a separate scope.

Once you’re confident your books are caught up, you’re ready to sail, right? Not so fast. Bookkeeping is never a “set and forget” process. In fact, it never ends. Therefore, having a good bookkeeping service at your side is essential to ongoing success.

At Visory, a dedicated team runs your bookkeeping, payroll, and accounts payable and receivable, with our AI, Delphi, helping deliver the work under that team’s oversight. The same team can scope and complete a catch-up on your records and then keep everything current from month to month.

Catch-up bookkeeping is essential if your books are unreconciled, payroll records are incomplete or the ATO is asking questions. Catch-up bookkeeping also comes in handy when you’ve simply been short-staffed, and you know some receipts might have slipped through the cracks. If your books need catching up before new software, a funding conversation or tax time, book a discovery call.